An online agent is offering brokers a £500 referral fee for a vendor lead – despite charging only £395 upfront to sellers.
The firm, so far quietly under the radar, is also now boarding estate agents into its business model.
Agent Online says it can afford to pay brokers such a hefty sum partly because it also charges sellers a fee on completion, and partly because £200 of the referral fee comes from a conveyancer, if the vendor opts to use Agent Online’s recommended firm.
Dominic Toller, director and founder of the Bristol-headquartered online agency, said the business is pushing hard to grow its network of referring brokers to about 1,000.
An attraction for them is that as well as getting a fee for referring possible vendors, Agent Online asks for the broker’s assistance in financially qualifying potential buyers – typically, people looking for mortgages and other financial services.
Toller said: “We started Agent Online three or four years ago when we began looking at going down the Purplebricks and Emoov route – but we realised early on that we would have needed very deep pockets.”
He said the costs of customer acquisition were very high for these types of online or hybrid agents – “But we have kept our costs incredibly lean. As an online/hybrid agent, we are not currently looking to take over the world, but we are going to steadily grow.”
Agent Online charges a headline £395, which includes photography, floorplans, and listing on Rightmove and Zoopla for 12 months. Extras, such as one accompanied viewing, can be added for £45.
However, the £395 is an element of its ‘part and part’ package, where the sum is paid before any marketing; a completion fee is then agreed when the property sells.
The terms and conditions emphasise that the completion fee is still payable if the property sells to a buyer introduced by Agent Online up to a year after it has been disinstructed.
There is no guidance on the likely total cost of the ‘part and part’ package but it is likely to be a little pricier than the standard £995 upfront fee that is also charged.
Toller said that brokers are showing great interest in the referral offer – and that it makes total sense to them that Agent Online shares its revenue with the broker that introduced the vendor.
He also said that the business is attracting estate agents to join it – even though this has yet to be promoted.
He said: “It helps someone to set up on their own in a very cost-effective way. That someone could typically be an experienced branch manager wanting to run their own business, and have their own local branding.
“They can use their own name, but come under our umbrella and use our software, systems and services – for example, the viewings booking service or sales progression.
“We haven’t pushed this much, but already about half a dozen agents have joined us and we are in talks with a number of other firms.
“It works because it allows them to choose what price to offer a vendor, and removes a great deal of the agent’s fixed costs but enables the agent to retain control.
“It is proving particularly attractive to agents that need to reduce their costs at the moment in order to remain profitable.”
Agent Online currently has some 100 properties on its books.
Toller said: “From a marketing awareness perspective, Purplebricks has done an outstanding job building its brand, but it has been a very costly exercise.
“We have chosen not to try going down that route but rather work with the local agent’s existing brand. We do not charge upfront fees to agents that want to work with us and there is a very low monthly licensee fee.
“The online/hybrid agency market has had its beginning, and we don’t know how it will progress. But what I would say is that estate agency won’t go back to being what it was.”